Why Isn’t BlackRock Directly Securing the Bitcoin It Holds for Clients?
A recent controversy has arisen in the Bitcoin space concerning BlackRock and Coinbase, especially given Coinbase’s significant role in the storage of Bitcoin for various American Spot ETFs. Accusations have surfaced suggesting that Coinbase may not be holding all the Bitcoin it claims, leading to concerns about a potential FTX-like situation.
To address these worries, Eric Balchunas, a senior ETF analyst at Bloomberg, noted that BlackRock verifies its Bitcoin holdings by running a node on the Bitcoin blockchain and checking balances on Coinbase Prime every night. This is intended to reassure both institutional and retail clients about their investments.
However, a pressing question remains: why hasn’t BlackRock established its infrastructure to manage the private keys for the Bitcoin it holds for clients in its Spot ETF? Given its vast resources, it would make sense for BlackRock to take a page from Fidelity, the only major financial firm that manages Bitcoin private keys directly.
By doing so, BlackRock could eliminate the Bitcoin paper controversy and demonstrate its commitment to the principles it espouses about Bitcoin being a power asset free from counterparty risk. So, what is BlackRock waiting for?
I’d love to hear your thoughts on this!
